The Enron/Arthur Andersen scandal has raised concerns internationally about auditor independence, audit quality, and the need for regulatory action such as mandatory auditor rotation. China's unique institutional features provide us with a setting in which to compare comprehensively the various...

We examine how adjustments to earnings during year-end audits affect measures of earnings quality. There are four key findings. First, audit adjustments cause earnings to become smoother and more persistent. Second, the adjustments result in higher accrual quality. Third, audit adjustments have...

In recent years, the Chinese government and the public accounting profession have advocated the audit practitioners’ use of professional liability insurance (PLI). As a tool to divert audit firms’ business risk, PLI contracts could decrease auditors’ diligence in conducting audits, which...

Listed companies commonly appoint their incumbent annual auditors to audit a target company during a merger and acquisition (M&A). However, some companies choose an alternative auditor to perform the M&A audit. To understand the consequences of this apparently unconventional auditor choice, we...